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Bullish
🧧🧧Core Causes of the Bear Market
1. Macroeconomic Factors: The Federal Reserve's interest rate hikes and high inflation due to tightening monetary policies will siphon liquidity from the crypto market, causing funds to flow back from high-risk crypto assets to traditional low-risk sectors, which is an important driver of the bear market's initiation.
2. Negative Industry Events: Exchange collapses (like FTX), project team absconding, and tightening regulatory policies (such as various countries strengthening crypto regulations) can severely undermine market confidence, leading to panic selling.
3. Market Bubble Burst: In the later stages of a bull market, a large number of speculative coins and projects lacking practical implementations are excessively hyped, leading to a severe deviation of valuations from their actual value. After the bubble bursts, a return to value occurs, dragging the overall market down.
4. Technological Iteration Gap: Innovations and breakthroughs in core technologies like public chains enter a stagnation period, with the industry lacking new narratives and growth points, making it difficult to attract incremental funds to enter the market.
II. Typical Characteristics of a Bear Market
1. Price Performance: Mainstream coins (BTC, ETH) have dropped over 50%, while altcoins generally experience declines of over 80%, with the total market capitalization significantly shrinking.
2. Trading Data: Trading volume remains persistently low, with a sharp drop in the activity of spot and derivative trading; trading volumes in ecosystems such as DEX and NFTs have halved or even more.
3. Market Sentiment: The discussion intensity in crypto communities declines, with FUD (Fear, Uncertainty, Doubt) sentiment dominating; retail investors are leaving the market en masse, and institutions are also adopting a wait-and-see attitude.
4. Industry Behavior: The difficulty for project teams to secure funding increases, small team projects gradually shut down, leading projects start to cut costs and focus on core businesses; the mining industry faces losses due to falling coin prices, resulting in a wave of mining machine sell-offs.
III. The Impact and Subsequent Trends of the Bear Market
1. Short-term Negative Effects: Investors' assets shrink, job opportunities in the industry decrease, and some ecological applications cease operations due to a lack of funds.
2. Long-term Positive Effects: Squeezing out market bubbles, eliminating low-quality projects, and forcing the industry to return to the essence of technology and practical implementation; at the same time, it prepares high-quality projects and technological innovations for the next bull market (as the bear market often marks a critical period for the development of underlying technologies of public chains).
3. Cyclical Patterns: The crypto market's bull and bear cycles are typically correlated with Bitcoin's halving cycle (approximately every 4 years), with bear markets usually lasting 1-2 years, during which there will be multiple rebounds but it is difficult to break through key resistance levels.
1. Macroeconomic Factors: The Federal Reserve's interest rate hikes and high inflation due to tightening monetary policies will siphon liquidity from the crypto market, causing funds to flow back from high-risk crypto assets to traditional low-risk sectors, which is an important driver of the bear market's initiation.
2. Negative Industry Events: Exchange collapses (like FTX), project team absconding, and tightening regulatory policies (such as various countries strengthening crypto regulations) can severely undermine market confidence, leading to panic selling.
3. Market Bubble Burst: In the later stages of a bull market, a large number of speculative coins and projects lacking practical implementations are excessively hyped, leading to a severe deviation of valuations from their actual value. After the bubble bursts, a return to value occurs, dragging the overall market down.
4. Technological Iteration Gap: Innovations and breakthroughs in core technologies like public chains enter a stagnation period, with the industry lacking new narratives and growth points, making it difficult to attract incremental funds to enter the market.
II. Typical Characteristics of a Bear Market
1. Price Performance: Mainstream coins (BTC, ETH) have dropped over 50%, while altcoins generally experience declines of over 80%, with the total market capitalization significantly shrinking.
2. Trading Data: Trading volume remains persistently low, with a sharp drop in the activity of spot and derivative trading; trading volumes in ecosystems such as DEX and NFTs have halved or even more.
3. Market Sentiment: The discussion intensity in crypto communities declines, with FUD (Fear, Uncertainty, Doubt) sentiment dominating; retail investors are leaving the market en masse, and institutions are also adopting a wait-and-see attitude.
4. Industry Behavior: The difficulty for project teams to secure funding increases, small team projects gradually shut down, leading projects start to cut costs and focus on core businesses; the mining industry faces losses due to falling coin prices, resulting in a wave of mining machine sell-offs.
III. The Impact and Subsequent Trends of the Bear Market
1. Short-term Negative Effects: Investors' assets shrink, job opportunities in the industry decrease, and some ecological applications cease operations due to a lack of funds.
2. Long-term Positive Effects: Squeezing out market bubbles, eliminating low-quality projects, and forcing the industry to return to the essence of technology and practical implementation; at the same time, it prepares high-quality projects and technological innovations for the next bull market (as the bear market often marks a critical period for the development of underlying technologies of public chains).
3. Cyclical Patterns: The crypto market's bull and bear cycles are typically correlated with Bitcoin's halving cycle (approximately every 4 years), with bear markets usually lasting 1-2 years, during which there will be multiple rebounds but it is difficult to break through key resistance levels.
Disclaimer: Includes third-party opinions. No financial advice. May include sponsored content. See T&Cs.
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